Value Unleashed

Market Update

Forty-five Canadian M&A transactions closed this past week. Year to date, M&A closed deal count is 10.8% higher than the comparable period in 2016. The Canadian dollar appreciated by 0.95 cents, ending the week at 74 cents. The TSX was down 0.5% and outperformed the S&P 500 by 1.2% in U.S. dollar terms. 

The new issue environment for U.S. middle market loans became slightly more favourable. Average total leverage rose to 5.6x EBITDA from 5.2x last week while yields fell by 1 bps to 6.34%, which is 40 bps lower than a year ago. Direct lending was identified by investment consultants to be the most promising type of private debt for 2017 in a Preqin survey. Approximately 60% of investment consultants surveyed would invest more capital in this fund type in 2017, and almost 15% would recommend direct lending, shifting from a negative recommendation in 2016.

Valitas Insights: Where’s the Value?  Strategies for Successful Acquisitions: Part 1

We are living in an M&A world where many acquisitions fail to create value.  But the corollary, of course, is that some acquisitions DO create value, and the obvious question is why.  In the current environment, where companies are relying more heavily on M&A to drive revenue growth, that’s a significant “why”, so we went looking for an answer.  To read about several successful acquisition strategies and an important overarching principle, read our full article.

Canadian M&A Transactions[i]

Healthcare (Closed)

Sheridan Capital Partners has Acquired Canadian Orthodontic Partners

Sheridan Capital Partners, a U.S.-based private equity firm, has acquired Canadian Orthodontic Partners, a company that provides back-office support to orthodontic practices in Canada. No transaction terms were released.

Materials (Announced)

New Gold to Acquire Little Bear Gold

New Gold Inc. (TSX:NGD), a Canadian intermediate gold mining company that engages in the development and operation of mineral properties, has agreed to acquire Little Bear Gold Corp., a Canadian company that offers gold mining and exploration services. Total transaction value is estimated to be $2.5 million.

Materials (Closed)

Caisse de dépôt et placement du Québec has Acquired One51

Caisse de dépôt et placement du Québec, a privately-owned Canadian investment manager, has acquired One51 plc, an Irish company that manufactures and sells various plastic products internationally. No transaction terms were released.

ABE Resources has Acquired Pioneer Resources

ABE Resources Inc. (TSXV:ABE), a Canadian company that engages in the acquisition and exploration of mineral properties in Québec, has acquired Pioneer Resources Inc., a Canadian mineral exploration company. Total transaction value is estimated to be $421 thousand.

Industrials (Announced)

IPL to Acquire Macro Plastics

IPL Inc., a Caisse de dépôt et placement du Québec and Fonds de solidarité FTQ backed Canadian company that manufactures and supplies injection-molded plastic products for industrial and agri-food markets in North America, has agreed to acquire Macro Plastics Inc., a U.S.-based company that manufactures and sells bulk plastic containers, and temporary roadway and mat systems. Total transaction value is estimated to be $203 million, reflecting a 9.4x EBITDA multiple.

Oakley Capital Investments to Acquire TechInsights

Oakley Capital Investments Limited (AIM:OCL), a Bermuda-based private equity and venture capital firm, has agreed to acquire TechInsights Inc., a Canadian company that provides intellectual property services. No transaction terms were released.

Leonard Green & Partners; OMERS Administration to Acquire OPE Caliber Holdings

Leonard Green & Partners, L.P., a U.S-based private equity and venture capital firm and OMERS Administration Corp., a Canadian privately owned pension fund, have agreed to acquire OPE Caliber Holdings Inc., a U.S.-based company that provides car repair services. No transaction terms were released.

Industrials (Closed)

BGR Saws has Acquired Simonds International

BGR Saws Inc., a Canadian company that manufactures circular and band saws for lumber mills, has acquired Simonds International Corporation, a U.S.-based company that manufactures and markets cutting tools and related equipment for the industrial market in North America. No transaction terms were released.

Mantra Venture Group has Acquired AW Solutions

Mantra Venture Group Ltd. (OTCPK:MVTG), a Canadian company that identifies, acquires, develops, and markets technologies related to alternative energy production and reduction of greenhouse gas emissions and resource consumption, has acquired AW Solutions Inc., a U.S.-based company that provides telecommunications infrastructure and fiber fed distributed antenna systems deployment services to the wireless and wireline industry. Total transaction value is estimated to be $2.7 million.

Consumer Discretionary (Closed)

Beringer Capital has Acquired ICiDigital

Beringer Capital, a Canadian private equity firm, has acquired ICiDigital Inc., a U.S.-based technology enabled digital marketing company that provides enterprise digital marketing solutions in North America. No transaction terms were released.

Financials (Announced)

The Great-West Life Assurance Company to Acquire Financial Horizons

The Great-West Life Assurance Company, a Canadian company that provides insurance and reinsurance solutions in Canada and Europe, has agreed to acquire Financial Horizons Inc., a Genstar Capital LLC backed Canadian company that provides insurance products and services to financial advisors. No transaction terms were released.

LBC Capital to Acquire Northpoint Commercial Finance

LBC Capital Inc, a Canadian subsidiary of the Laurentian Bank of Canada (TSX:LB), has agreed to acquire Northpoint Commercial Finance LLC, a U.S.-based company that offers inventory financing services. No transaction terms were released.

Financials (Closed)

Toyota Industries Global Commercial Finance has Acquired LiftCapital

Toyota Industries Global Commercial Finance Inc., a U.S.-based company that promotes and manages sales financing for materials handling equipment, has acquired LiftCapital Corporation, a Canadian company that provides sales financing services and solutions to lift truck dealers and other customers. LiftCapital is to be renamed to Toyota Industries Commercial Finance Canada Inc.

SoundExchange has Acquired Canadian Musical Reproduction Rights Agency

SoundExchange Inc., a U.S.-based company that collects and distributes digital performance royalties for sound recording copyright owners and artists, has acquired Canadian Musical Reproduction Rights Agency Ltd., a Canadian company that offers music licensing and royalty collection services. No transaction terms were released.

Devonian Health Group has Acquired Orletto Capital

Devonian Health Group Inc., a Canadian company that develops botanical drugs, has acquired Orletto Capital Inc., a capital pool company based in Canada, in a reverse merger transaction. No transaction terms were released.

Information Technology (Announced)

Global UAV Technologies to Acquire Easy SFOC

Global UAV Technologies Ltd. (CNSX:UAV), a Canadian company that provides unmanned aerial vehicle (UAV) surveying services in Ontario, has agreed to acquire Easy SFOC Ltd., a Canadian company that provides an online platform which enables recreational and commercial unmanned aerial vehicle users to apply for special flight operation certificates. Total transaction value is estimated to be $100 thousand.

Green Life Clinics to Acquire Patient Access Pavilions

Green Life Clinics Ltd., a Canadian company that generates and converts leads for licensed producers and ancillary marijuana businesses, has agreed to acquire Patient Access Pavilions Ltd., a Canadian company that serves as a gateway between health service providers and Access to Cannabis for Medical Purpose Regulations (ACMPR) patients. No transaction terms were released.

Information Technology (Closed)

The Descartes Systems Group has Acquired Z-Firm

The Descartes Systems Group Inc (TSX:DSG), a Canadian company that provides federated network and logistics technology solutions worldwide, has acquired Z-Firm LLC, a U.S.-based company that develops and offers parcel shipping software. Total transaction value is estimated to be $23.0 million.

Valsoft has Acquired Creative Information Systems

Valsoft Corp, a Canadian investment firm, has acquired Creative Information Systems Inc., a U.S.-based company that develops, sells, and supports automated scale management software solutions for organizations and municipalities to track and record truck or industrial scale transactions. No transaction terms were released.

Eddyfi NDT has Acquired Technical Software Consultants

Eddyfi NDT Inc., a Canadian company that develops surface and tubing inspection equipment and software for ferrous and non-ferrous materials with eddy currents and electromagnetic techniques, has acquired Technical Software Consultants Ltd., a U.K.-based company that designs and manufactures instruments for the non-destructive testing of metallic structures. No transaction terms were released.

Bartragh Services has Acquired C4i Training and Technology

Bartragh Services LLC, a U.S.-based company that provides simulation, training, intelligence and aviation support services to international military and emergency management users, has acquired C4i Training and Technology Inc., a Canadian simulation and training software solutions provider. No transaction terms were released.

EVO Payments International has Acquired Zenith Merchant Services

EVO Payments International LLC, a U.S.-based company that provides electronic payments processing and acquiring services for professional organizations internationally, has acquired Zenith Merchant Services Inc, a Canadian company that provides payment processing solutions. No transaction terms were released.

Cansel Survey Equipment has Acquired Atlantic CAD Solutions

Cansel Survey Equipment Inc., a Canadian company that provides software, hardware, and services to engineering, surveying, construction, architecture, government and printing industries, has acquired Atlantic CAD Solutions Inc., a Canadian company that provides CAD/BIM/GIS technology and IT infrastructure services. No transaction terms were released.

Real Estate (Closed)

Dream Global Real Estate Investment Trust has Acquired SPE III Runway

Dream Global Real Estate Investment Trust (TSX:DRG.UN), a Canadian company that invests in real estate markets across the globe, has acquired SPE III Runway SPRL, a Belgian company that owns and operates a multi-tenant office complex near Brussels International Airport. Total transaction value is estimated to be $144 million.

Other (Announced)

Deploy Technologies to Acquire Nevada Medical Group

Deploy Technologies Inc. (OTCPK:DPLY), a Canadian company that develops fleet data management and weigh system products, has agreed to acquire Nevada Medical Group LLC, a U.S.-based supplier and grower of medical marijuana. Total transaction value is estimated to be $7.5 million.

McFarlan Rowlands Insurance Brokers to Acquire Callister Musico Insurance Group

McFarlan Rowlands Insurance Brokers Inc., a Canadian insurance brokerage services provider, has agreed to acquire Callister Musico Insurance Group Inc., a Canadian company that provides Property and Casualty, Home, and Auto Insurance. No transaction terms were released.

Quinsam Capital to Acquire High Standard Royalty

Quinsam Capital Corporation (CNSX:QCA), a Canadian company that provides merchant banking services to the small-cap market in Canada, has agreed to acquire High Standard Royalty Corp., a Canadian company founded by FMI Capital Advisory. Total transaction value is estimated to be $420 thousand.

Other (Closed)

Weins Canada has Acquired Mississauga Honda

Weins Canada, a company that owns and operates car dealerships, has acquired Mississauga Honda, an owner and operator of car dealerships. No transaction terms were released.

The Fastway Group has Acquired Sauve Lumber and Building Supplies

The Fastway Group Inc., a Canadian company that distributes building products, has acquired Sauve Lumber and Building Supplies LTD., a Canadian company that sells lumber, construction and home materials, tools, and accessories. No transaction terms were released.